In Portugal, Deflation More Than Just a Threat

Cuts Helped Country Boost Exports, but Many Struggle to Recover

LISBON—José Teixeira isn't familiar with the word deflation. But he can tell you exactly what Portugal's downward spiral of shrinking paychecks and falling prices has done to Sal-Si-Fré, his modest restaurant.

"My business has been through a lot" in its 20 years, he said. "But this is by far the most difficult crisis."